Navigating the ‘Wild West’ of payment integrity with a data-driven approach

New therapies are an offshoot of innovation in healthcare, but with that can come a high cost, which becomes a crucial consideration for health plans.

Amid the introduction of new gene therapies, shifting sites of care and the speed of technological advancement, there is a “Wild West” feel to healthcare innovation – one that leaves healthcare leaders wondering, “What are the rules for applying these new advancements — and how do we pay for them?”

It’s a question that not only has financial implications for health plans, but, more importantly, significant repercussions for patient wellness. This makes it essential that health plans build in the right supports to make determinations around when and how new innovations in technology-enabled care, drug treatments and care should be approached.

To start, a data-driven approach to payment integrity is a vital step toward wrangling new innovations and preventing a Wild West of waste and abuse.

The stakes for data-driven insight

Amid the race to innovate in healthcare, cost is a crucial consideration for health plans in evaluating what to cover and when. Gene therapy trials have risen sharply in the past few years, with trials for hemophilia, inherited retinal disease and metastatic melanoma now taking place. Such trials offer vital hope to those with rare conditions.

However, new gene therapies also can carry hefty price tags, with Zynteglo, a gene therapy for a rare blood disorder, costing $2.8 million per patient. And while Zyntelgo is a life-changing discovery for those who suffer from this rare blood disorder, which disrupts the production of hemoglobin, the list price for Zynteglo makes it one of the nation’s most expensive gene therapy drugs.

But list price alone isn’t what drives up the cost of innovation for health plans. So does the potential for errors, waste and abuse, which increases in a rapid-discovery environment.

For instance, while many plans rely on prior authorization to ease the processing of specialty drug claims, the complexity and expense of these drugs — nearly half of which are paid for as a medical benefit of the plan rather than a pharmacy benefit — make them prone to inaccurate billing, fraud and abuse.

Excessive testing is also a common technique used by bad actors to bill for unnecessary services. One Cotiviti data analysis uncovered a provider that billed for more than 20 unique genetic tests performed per member — well more than double the average of the provider’s peers. A similar investigation — prompted by the discovery that a provider had billed for a high ratio of COVID-19 tests compared with peers — uncovered other patterns that pointed to the potential for waste and abuse.

In these instances, a data-driven approach to payment integrity can help ensure new innovations are applied in the right way for the right member. They are also a useful tool for explaining benefit determinations to members when the rationale for testing or treatment doesn’t match guidance published by the American Medical Association or organizations with specialty-specific expertise.

Guidance for a new world

The need for a robust payment integrity function in health plans is as strong as ever, but the sophistication of waste and abuse schemes, and the speed of innovation demand that plans tighten their approach. Here are three actions to consider.

Assess the total cost of ownership of your existing payment integrity function. After that assessment, a plan can compare it to the cost of its peers. If the cost of ownership is higher than average, this could indicate the need for a partner that can help the health plan keep up with payment policy content updates from entities such as the Centers for Medicare & Medicaid Services. Such updates will help inform an organization’s coverage policies around new and emerging treatments. It also will decrease costs related to under-editing or over-editing and reduce the potential for provider abrasion.

Leverage artificial intelligence (AI) and machine learning to spot outliers and detect potential patterns of waste and abuse. AI can comb through disparate datasets quickly, flagging patterns that might otherwise be missed. These tools should be applied to all major claim types, including professional, outpatient facility, inpatient and drug claims. However, while AI and machine learning are valuable tools in a health plan’s payment integrity portfolio, they are most valuable when backed by clinical and analytical expertise. For example, issues with inpatient claims require expert review by qualified nurse coders who understand the nuances of inpatient claims and may need to inspect medical records to dig deeper for answers. Similarly, suspected issues with genetic testing or specialty drug claims would benefit from review by a specialist in these areas.

Establish expectations for consistency in enforcement across the team. It’s not uncommon for a coverage determination to be enforced by a health plan’s technology solutions, but then overridden by a health plan employee. Typically, this occurs when a provider is upset by the determination and the claim falls within a threshold for an employee to make a judgment call. When inconsistencies in behavior occur, they can be confusing for providers and costly for payers. One way to curb judgment calls such as this is by aligning incentives between prepay and post-pay integrity teams as well as third-party vendors. Furthermore, when new schemes are detected, this knowledge should be shared among prepay and post-pay integrity teams to strengthen the health plan’s overall approach.

Finding the right balance

New innovations in medical technology, therapies and treatment offer tremendous potential for improved health, but they can also expose health plans to risk when internal processes for detecting errors, waste and abuse are not solidified.

By leveraging a collaborative approach to payment integrity that includes data analysis at the core, health plans can more effectively empower members to receive the care they need from providers they can trust.

Matthew Hawley is executive vice president, payment integrity for Cotiviti.

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